Correlation Between Berkshire Hathaway and Brookfield Wealth

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Brookfield Wealth at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Berkshire Hathaway and Brookfield Wealth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berkshire Hathaway CDR and Brookfield Wealth Solutions, you can compare the effects of market volatilities on Berkshire Hathaway and Brookfield Wealth and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Berkshire Hathaway with a short position of Brookfield Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Brookfield Wealth.

Diversification Opportunities for Berkshire Hathaway and Brookfield Wealth

-0.72

Correlation Coefficient

Berkshire Hathaway  Brookfield Wealth

Pay attention - limited upside

The 3 months correlation between Berkshire and Brookfield is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Brookfield Wealth Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Wealth and Berkshire Hathaway is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Berkshire Hathaway CDR are associated (or correlated) with Brookfield Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Wealth has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Brookfield Wealth go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Brookfield Wealth

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the Brookfield Wealth. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 2.07 times less risky than Brookfield Wealth. The stock trades about -0.23 of its potential returns per unit of risk. The Brookfield Wealth Solutions is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7,696  in Brookfield Wealth Solutions on May 7, 2025 and sell it today you would earn a total of  1,305  from holding Brookfield Wealth Solutions or generate 16.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Berkshire Hathaway CDR  vs.  Brookfield Wealth Solutions

Berkshire Hathaway CDR

Risk-Adjusted Performance

Weakest

Over the last 90 days Berkshire Hathaway CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Brookfield Wealth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Wealth Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Brookfield Wealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Brookfield Wealth

The main advantage of trading using opposite Berkshire Hathaway and Brookfield Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Brookfield Wealth can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brookfield Wealth will offset losses from the drop in Brookfield Wealth's long position.

The idea behind Berkshire Hathaway CDR and Brookfield Wealth Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.